How do I go full time on my start-up?

January 29, 2008 8:30 PM

In the evenings and weekends, I've been working on a web start-up company with a colleague. I think our idea is great and can make money and we're both pretty smart. I want to go full time. What is the best way to do this?

My day job pays well and I quite enjoy it, but it's stressful and sometimes involves long hours. This means that I'm working myself really hard both during the day and in the evenings.

Other data: I have a good degree from a good University and about five years' worth of job experience. The only outlay for the start-up would be hosting costs. I live in a capital city in the first world. I could quit my job and live for about three months on money I've saved up. I think if the start-up failed I would have pretty good job prospects afterwards. (Am I wrong on this one?)

posted by anonymous to work & money (8 comments total)

I think if the start-up failed I would have pretty good job prospects afterwards. (Am I wrong on this one?)

I don't know about London, but in the US, I strongly suspect that VC money will be very tight until a year or so after the coming presidential election. Corporate acquisitions are likely to slow, and no one takes IPOs seriously anymore as an exit strategy.

Unless you have a good relationship with serial entrepreneurs who can help you with your exit, you should probably focus on moving up in your current company while waiting out the subprime and French fraud messes.
posted by b1tr0t at 8:43 PM on January 29

I'm assuming you're in the US -- go down to your local Small Business Administration and pick up all their free resources for getting started. Some places have a program called SCORE in which they hook you up with a mentor where you can ask all your questions. Go to the library and pick up books on starting your own business.
posted by amanda at 9:03 PM on January 29 [1 favorite]

Three months for a startup is a bit perilous; do you have good credit / can you borrow large amounts of money / do you have rich friends or relatives who could be induced to invest?

I'd recommend having a bit more of a cushion, especially if you aren't actually making money on the startup yet.

If it fails, you'll definitely have good prospects- employers often like this kind of experience- but is 3 months enough time to decide that it's a success or a failure?

Good luck!
posted by jenkinsEar at 9:38 PM on January 29

Unless your startup is going to be profitable from day one including paying your hypothetical salary which you're not taking, don't do this.
posted by Caviar at 9:54 PM on January 29

Bad idea. Run your startup on the side, else you will get too hungry to be useful
posted by markovich at 3:41 AM on January 30

Have you considered an in-between option, such as becoming a consultant to your current employer or going part-time? That way, you could work fewer hours but still have a bit of income coming in while you got the new business going.

Also, is your idea so hot that someone else is going to jump on it and run ahead? Or have you found a unique angle that only you can do, so the timeline could be longer? If you can find an approach that no one can easily reproduce, such as a unique "personality," you'll not only buy yourself some time, once you're established you'll be less vulnerable to competitors.

So far, I've bootstrapped my online venture (no loans, no investors). In exchange for this low risk I have a pretty slow ramp-up because I'm doing wage work while I get the business going. Luckily people are used to the idea of a rather long beta.

You say the only outlay would be hosting costs, but you might want to brace yourself for some legal fees as well. You're guaranteed to need some sort of legal agreement at some point. I got nervous and had a custom beta test agreement done for a painful US $880. If you haven't done it already, you'll also want to protect yourself by incorporating, which actually can be pretty cheap in the US (I set up an LLC for $80 through my state's government web site).

I agree that 3 months is cutting it short. If you could stretch it to 6, you and your potential business would have a better chance.

In the US, the Small Business Administration (SBA) and the Service Corps of Retired Executives (SCORE) are helpful for conventional businesses, but they might not understand the web startup world. A hi-tech incubator would be more likely to get you in touch with the right advisors. My local SBA-affiliated advisor meant well but wasted my time giving me inappropriate and sometimes wrong advice. She was also required to apply the same approach to every business, which doesn't work well these days.
posted by PatoPata at 9:42 AM on January 30

Oof. If I understand correctly, you'd be in trouble if the start-up doesn't have money (sales or investment) within three months? That's really scary. I encourage you to try to make a go with it (after all, I just quit my day job for a start-up, so I really want to believe it can work!), but Hofstadter's Law applies to startups too, and you should reeeally think hard if that's a big enough cushion before you make the leap.

Is reducing your hours at your day job a possibility? I spent six months working 75% time before I went all in, which really helped (now I can feel confident that I won't be homeless any earlier than Q3, which in Minnesota can be a life or death proposition...). If your current employers are supportive, it can give you a lot more security while still freeing up your time (an extra half-hour every evening and an extra day every weekend helps).
posted by nicepersonality at 10:38 AM on January 30

Untill the business is paying you, it's not a business, it's a hobby. Don't quit until it's a business.

Wait until you actually start selling your product/service. To often, would-be entrepreneurs jump into new businesses well before they know whether or not anyone else values the what they're offering.

No matter how many friends, colleagues or advisors have told you how great your business plan is, do not give up the security of a day job until after you've started making sales. The only way to know whether or not your business is going to be successful is to have complete strangers offer to give you money in exchange for its fruits.
posted by danec at 6:07 AM on January 31